0001214659-18-006605.txt : 20181022 0001214659-18-006605.hdr.sgml : 20181022 20181022172234 ACCESSION NUMBER: 0001214659-18-006605 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20180523 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20181022 DATE AS OF CHANGE: 20181022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DPW Holdings, Inc. CENTRAL INDEX KEY: 0000896493 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 941721931 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12711 FILM NUMBER: 181132849 BUSINESS ADDRESS: STREET 1: 201 SHIPYARD WAY CITY: NEWPORT BEACH STATE: CA ZIP: 92663 BUSINESS PHONE: 5106572635 MAIL ADDRESS: STREET 1: 201 SHIPYARD WAY CITY: NEWPORT BEACH STATE: CA ZIP: 92663 FORMER COMPANY: FORMER CONFORMED NAME: DIGITAL POWER CORP DATE OF NAME CHANGE: 19960823 8-K/A 1 j10221818ka1.htm

UNITED STATES
      
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
____________________________________________________________
 
FORM 8-K/A

Amendment No. 1


CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
___________________________________________________________________
 
Date of Report (Date of earliest event reported):  May 23, 2018
 
DPW HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
001-12711
 
94-1721931
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

201 Shipyard Way, Newport Beach, CA 92663
 (Address of principal executive offices) (Zip Code)

(510) 657-2635
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 

 

 

Explanatory Note

 

This Amendment No. 1 on Form 8-K/A (the “Amended Current Report”) amends the Current Report on Form 8-K of DPW Holdings, Inc. originally filed with the Securities and Exchange Commission on August 1, 2018 (the “Prior Filing”).

 

Other than the foregoing, this Amended Current Report speaks as of the original date of the Prior Filing, does not reflect events that may have occurred subsequent to the date of the Prior Filing and does not modify or update in any way disclosures made in the Prior Filing other than correct an error in the unaudited pro forma condensed combined financial statements as of and for the year ended December 31, 2017 and the three months ended March 31, 2018. The Company had omitted preferred dividends on its unaudited pro forma condensed combined statements of income and comprehensive loss for the year ended December 31, 2017 which created mathematical errors in the statement and has provided additional disclosures relating to the Company’s May 15, 2018 10% Convertible Note Financing on the unaudited pro forma condensed combined balance sheet as of March 31, 2018

 
Item 1.01 Entry into a Material Definitive Agreement.

Acquisition of Enertec Management Ltd.
 

As previously reported in a Current Report on Form 8-K filed by DPW Holdings, Inc. (the “Company”) on January 2, 2018, Coolisys Technologies Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Coolisys”), entered into a Share Purchase Agreement dated December 31, 2017 (the “Enertec Agreement”) with Micronet Enertec Technologies, Inc., a Delaware corporation (“MICT”), Enertec Management Ltd., an Israeli corporation and wholly owned subsidiary of MICT (“EML” and, together with MICT, the “Seller Parties”), and Enertec Systems 2001 Ltd., an Israeli corporation and wholly owned subsidiary of EML (“Enertec”).  On May 23, 2018, as previously reported in a Current Report on Form 8-K filed by the Company on May 23, 2018, Coolisys acquired Enertec subject to the terms and conditions set forth in the Enertec Agreement (the “Acquisition”) for an aggregate purchase price of $5,250,000, which includes a deduction of (i) a closing debt of $288,439 in excess of the Allowed Company Debt to be assumed by the Company (as defined in the Enertec Agreement) of $4,000,000 and (ii) $189,041 in Intercompany Accounts (as defined in the Enertec Agreement) for a total cash payment of $4,772,520.


At the closing of the Acquisition (the “Closing”), the Company, Coolisys, Enertec, MICT and David Lucatz, Chairman, President and Chief Executive Officer of MICT, entered into a three year consulting agreement (the “Consulting Agreement”) pursuant to which MICT, through Mr. Lucatz, shall provide certain services to Enertec in consideration of (i) an annual fee of $150,000 and (ii) an aggregate of 150,000 restricted shares of the Company’s Class A common stock (the “Restricted Shares”), of which 50,000 vests one day following the Closing (the “Grant Date”), 50,000 vests one year following the Grant Date, and 50,000 vests two years following the Grant Date.  The issuance of the restricted shares is subject to the approval of the NYSE American.

The foregoing descriptions of the Enertec Agreement and the Consulting Agreement do not purport to be complete and are qualified in their entirety by reference to the Enertec Agreement and the form of Consulting Agreement which are annexed hereto as Exhibits 2.1 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.  The Enertec Agreement has been included to provide investors and stockholders with information regarding its terms.  It is not intended to provide any other factual information about the Company, Coolisys, Enertec, EML or MICT.  The Enertec Agreement contains representations and warranties that the parties to the Enertec Agreement made to and solely for the benefit of each other, and the assertions embodied in such representations and warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Enertec Agreement.  Accordingly, investors and stockholders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Agreement (or such other date as specified therein) and are modified in important part by the underlying disclosure schedules.
 
   

 

 
Item 7.01 Regulation FD Disclosure.

On May 23, 2018, the Company issued a press release announcing that it had closed the Acquisition, which press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the information under this item, Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

Item 9.01 Exhibits and Financial Statements.
 
(a) Financial statements of business acquired

 

The audited financial statements of Enertec for its fiscal year ended December 31, 2017 and the unaudited financial statements for the three months ended March 31, 2018 are incorporated herein by reference to Exhibit 99.2 to this Current Report on Form 8-K.

 

(b) Pro forma financial information

 

Our unaudited pro forma condensed combined financial statements as of and for the year ended December 31, 2017 and the three months ended March 31, 2018 are incorporated herein by reference to Exhibit 99.3 to this Current Report on Form 8-K, and are based on the historical financial statements of the Company and Enertec after giving effect to the Exchange.

 
(d)          Exhibits:
 
 

* The exhibits and schedules to the Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish a supplemental copy of any omitted schedule or exhibit to the SEC upon request.

 

** Incorporated by reference to the Current Report on Form 8-K filed by the registrant on January 2, 2018.

 

*** Incorporated by reference to the Current Report on Form 8-K filed by the registrant on May 23, 2018.

 

**** Incorporated by reference to the Current Report on Form 8-K filed by the registrant on August 1, 2018.

 

***** Filed herewith.

 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
DPW HOLDINGS, INC.
 
 
 
 
Dated: October 22, 2018
/s/ William Horne
 
William Horne
Chief Financial Officer
 
 


EX-23.1 2 ex23_1.htm EXHIBIT 23.1

Exhibit 23.1

 

 

  Ziv Haft 
 

Head Office: Arnot Bituach House Bldg. B

48 Dereh Menahem Begin Rd.

Tel Aviv 66180, Israel

www.bdo.co.il     E-mail: bdo@bdo.co.il 

 

 

 

 

CONSENT OF INDEPENDENT REGISTRERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated April 13, 2018, relating to the financial statements of Enertec Systems 2001 Ltd. appearing in DPW Holdings, Inc's Current Report on Form 8-K/A filed on October 22, 2018.

 

 

We also consent to the reference to us under the caption "Experts" in the Prospectus.

 

 

 

 

  /s/ Ziv Haft
  Ziv Haft
  Certified Public Accountants (Isr.)
  BDO Member Firm

 

 

 

 

 

 

Tel Aviv, Israel

October 22, 2018


 

 

EX-99.3 3 ex99_3.htm EXHIBIT 99.3

Exhibit 99.3

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Statements

Dollars in thousands except per share amounts

 

The Unaudited Pro Forma Condensed Combined Financial Statements (the “Pro Forma Statements”) presented below are derived from the historical consolidated financial statements of DPW Holdings, Inc. (“DPW” or the “Company”) and Enertec Systems 2001 Ltd. (“Enertec”). The Pro Forma Statements are prepared as a business combination reflecting DPW's acquisition of Enertec (the “Acquisition”) and as if the Acquisition had been completed on January 1, 2017 for statement of income purposes and on March 31, 2018 for balance sheet purposes. The Pro Forma Statements do not give effect to the realization of any expected cost savings or other synergies from the Acquisition as a result of restructuring activities and other cost savings initiatives.

 

The pro forma amounts have been developed from (a) the audited consolidated financial statements of DPW contained in its Annual Report on Form 10-K for the year ended December 31, 2017 and the unaudited condensed consolidated financial statements of DPW contained in its Quarterly Report on Form 10-Q for the three months ended March 31, 2018, and (b) the audited financial statements of Enertec contained in this Current Report on Form 8-K for the year ended December 31, 2017 and the unaudited consolidated financial statements of Enertec contained in this Current Report on Form 8-K for the three months ended March 31, 2018. Historical results of Enertec have been adjusted to reclassify certain amounts to conform to DPW’s presentation.

 

The Pro Forma Statements have been prepared to reflect adjustments to our historical consolidated financial information that are (i) directly attributable to the acquisition, (ii) factually supportable and (iii) with respect to the Unaudited Pro Forma Condensed Combined Statement of Income, expected to have a continuing impact on our results.

 

Under accounting for business combinations, the assets and liabilities of Enertec were recorded at their respective fair values as of the date of the acquisition, May 23, 2018. DPW has not obtained third-party valuations of Enertec’s assets and liabilities. The values of Enertec’s assets and liabilities are based on preliminary valuations, as allowed by U.S. generally accepted accounting principles, and are subject to adjustment as additional information is obtained. We cannot provide any assurance that such adjustments will not result in a material change.

 

The Pro Forma Statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of DPW would have been had the Enertec acquisition occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

 

The Pro Forma Statements should be read in conjunction with the separate historical consolidated financial statements and accompanying notes of DPW and Enertec.

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Statements - Continued

(Amounts in thousands except per share data)

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEAR ENDED DECEMBER 31, 2017

 

 

   Historical   Pro Forma 
   DPW   Enertec   Adjustments   Combined 
                 
Revenue  $10,001   $7,061   $   $17,062 
Revenue, related party   174            174 
Total revenue   10,175    7,061        17,236 
Cost of revenue   6,325    7,790        14,115 
Gross profit (loss)   3,850    (729)       3,121 
Operating expenses                    
Engineering and product development   1,120    672        1,792 
Selling and marketing   1,721    546        2,267 
General and administrative   6,992    2,200        9,192 
Total operating expenses   9,833    3,418        13,251 
Loss from operations   (5,983)   (4,147)       (10,130)
Interest expense   (4,990)   (630)       (5,620)
Loss before income taxes   (10,973)   (4,777)       (15,750)
Income tax benefit (provision)   78    (124)       (46)
Net loss   (10,895)   (4,901)       (15,796)

Less: Net loss attributable to non-controlling

interest

   279            279 
Net loss attributable to DPW Holdings  $(10,616)  $(4,901)  $   $(15,517)

Preferred deemed dividends on Series B and

Series C Preferred Stock

   (584)           (584)
Preferred dividends on Series C Preferred Stock   (54)           (54)
Net loss available to common stockholders  $(11,254)  $(4,901)  $   $(16,155)
Basic and diluted net loss per common share  $(0.88)  $(19.53)  $   $(1.26)

Basic and diluted weighted average common

shares outstanding

   12,789,130    251,000        12,789,130 
Comprehensive loss                    
Loss available to common stockholders  $(11,254)  $(4,901)  $   $(16,155)
Other comprehensive income (loss)                    
Foreign currency translation adjustment   152    390        542 

Net unrealized loss on securities available-

for-sale

   5,171            5,171 
Other comprehensive income   5,323    390        5,713 
Total Comprehensive loss  $(5,931)  $(4,511)  $   $(10,442)

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Statements - Continued

(Amounts in thousands except per share data)

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2018

 

 

   Historical   Pro Forma 
   DPW   Enertec   Adjustments   Combined 
                 
Revenue  $3,166   $2,578   $   $5,744 
Revenue, cryptocurrency mining   237            237 
Revenue, related party   1,793            1,793 
Total revenue   5,196    2,578        7,774 
Cost of revenue   3,803    1,931        5,734 
Gross profit   1,393    647        2,040 
Operating expenses                    
Engineering and product development   343    58        401 
Selling and marketing   725    119        844 
General and administrative   3,222    411        3,633 
Change in fair value of digital currency   70            70 
Total operating expenses   4,360    588        4,948 
(loss) Income from operations   (2,967)   59        (2,908)
Interest expense   (3,132)   (99)       (3,231)
Loss before income taxes   (6,099)   (40)       (6,139)
Income tax benefit   4            4 
Net loss   (6,095)   (40)       (6,135)
Less: Net loss attributable to non-controlling interest   36            36 
Net loss available to common stockholders  $(6,059)  $(40)  $   $(6,099)
Basic and diluted net loss per common share  $(0.17)  $(0.16)  $   $(0.17)

Basic and diluted weighted average common shares

outstanding

   36,709,506    251,000        36,709,506 
Comprehensive (loss) income                    
Loss available to common stockholders  $(6,059)  $(40)  $   $(6,099)
Other comprehensive loss                    
Foreign currency translation adjustment   26    (10)       16 
Net unrealized loss on securities available-for-sale   (4,741)           (4,741)
Other comprehensive loss   (4,715)   (10)       (4,725)
Total Comprehensive loss  $(10,774)  $(50)  $   $(10,824)

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Statements - Continued

(Amounts in thousands except per share data)

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET - CONTINUED

AS OF MARCH 31, 2018

 

   Historical   Pro Forma 
   DPW   Enertec   Adjustments       Combined 
ASSETS                    
CURRENT ASSETS                         
Cash and cash equivalents  $630   $139   $860    (a2)/(a4)   $1,629 
Restricted cash       4,343             4,343 
Marketable securities   1,938                 1,938 
Digital currencies   166                 166 
Accounts receivable, net   1,565    4,844             6,409 
Accounts and other receivable, related party   1,967    316    (189)   (a2)    2,094 
Inventories, net   2,237    1,646             3,883 
Prepaid expenses and other current assets   2,702    13             2,715 
TOTAL CURRENT ASSETS   11,205    11,301    671         23,177 
Intangible assets   2,868                 2,868 
Goodwill   3,652        4,234    (a)    7,886 
Property and equipment, net   8,590    650             9,240 
Investments - related party, net   2,970                 2,970 
Investments in warrants and common stock - related party   4,624                 4,624 
Investments in preferred stock of private company   1,000                 1,000 
Other investments   2,011                 2,011 
Other investments, related parties   893                 893 
Other assets   680    96             776 
TOTAL ASSETS  $38,493   $12,047   $4,905        $55,445 
                          
LIABILITIES AND STOCKHOLDERS' EQUITY                         
CURRENT LIABILITIES                         
Accounts payable and accrued expenses  $4,680   $2,589   $        $7,269 
Accounts payable and accrued expenses, related party   81                 81 
Advances on future receipts   3,775                 3,775 
Short term advances   2,776                 2,776 
Short term advances, related party   295                 295 
Revolving credit facility   339                 339 
Notes payable, net   3,160    8,596    4,042    (a4)    15,798 
Notes payable, related party   162                 162 
Other current liabilities   727                 727 
TOTAL CURRENT LIABILITIES   15,995    11,185    4,042         31,222 
LONG TERM LIABILITIES                         
Notes payable   520                 520 
Notes payable, related parties   146                 146 
Accrued severance, net       134             134 
TOTAL LIABILITIES  $16,661   $11,319   $4,042        $32,022 

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Statements - Continued

(Amounts in thousands except per share data)

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET - CONTINUED

AS OF MARCH 31, 2018

 

   Historical   Pro Forma 
   DPW   Enertec   Adjustments       Combined 
COMMITMENTS AND CONTINGENCIES                         
STOCKHOLDERS' EQUITY                         
Preferred shares issued  $   $   $        $ 
Common shares issued   42    57    (57)   (a1)    42 
Additional paid-in capital   50,728        1,591    (a4)    52,319 
Accumulated (deficit)/retained earnings   (29,471)   373    (373)   (a1)    (29,471)
Accumulated other comprehensive (loss) income   (212)   298    (298)   (a1)    (212)
TOTAL DPW HOLDINGS STOCKHOLDERS' EQUITY   21,087    728    863         22,678 
Non-controlling interest   745                 745 
TOTAL STOCKHOLDERS' EQUITY   21,832    728    863         23,423 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $38,493   $12,047   $4,905        $55,445 

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Dollars in thousands except per share amounts

 

Note 1. Basis of Presentation

 

The accompanying Unaudited Pro Forma Condensed Combined Financial Statements (the “Pro Forma Statements”) present the pro forma combined consolidated financial position and results of operations of the combined company based upon the historical consolidated financial statements of DPW and Enertec, after giving effect to DPW's acquisition of Enertec (the “Acquisition”) and adjustments described in these footnotes, and are intended to reflect the impact of the Acquisition on DPW.

 

On January 2, 2018, Coolisys Technologies Inc., a Delaware corporation and wholly owned subsidiary of DPW (“Coolisys”), entered into a Share Purchase Agreement dated December 31, 2017 (the “Enertec Agreement”) with Micronet Enertec Technologies, Inc., a Delaware corporation (“MICT”), Enertec Management Ltd., an Israeli corporation and wholly owned subsidiary of MICT (“EML” and, together with MICT, the “Seller Parties”), and Enertec Systems 2001 Ltd., an Israeli corporation and wholly owned subsidiary of EML (“Enertec”).  On May 23, 2018, Coolisys acquired Enertec subject to the terms and conditions set forth in the Enertec Agreement (the “Acquisition”) for an aggregate purchase price of $5,250, which includes a deduction of (i) a closing debt of $288 in excess of the Allowed Company Debt to be assumed by the Company (as defined in the Enertec Agreement) of $4,000 and (ii) $189 in Intercompany Accounts (as defined in the Enertec Agreement) for a total cash payment of $4,773.

 

The assets and liabilities of Enertec have been reflected on the opening balance sheet. Long-lived assets such as property, plant and equipment reflect a value that a market participant would spend to replace the assets, which takes into account changes in technology, usage, and relative obsolescence of the assets. This approach often results in differences, sometimes material, from recorded book values even if, absent the acquisition, the assets would be neither increased in value nor impaired. In addition, assets and liabilities that would not usually be recorded in ordinary operations will be recorded at their acquisition values (e.g., customer relationships that were developed by the acquired company). Debt instruments and investments are valued in relation to current market conditions and other assets and liabilities are valued based on the acquiring company's estimates. After all identifiable assets and liabilities are valued, the remainder of the purchase price is recorded as goodwill. These values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained.

 

The accompanying Pro Forma Statements are presented for illustrative purposes only and do not give effect to any cost savings, revenue synergies or restructuring costs which may result from the integration of DPW's and Enertec's operations. The accompanying Pro Forma Statements have been adjusted to reflect adjustments to our historical consolidated financial information that are (i) directly attributable to the acquisition, (ii) factually supportable and (iii) to reclassify certain Enertec items to conform to DPW’s presentation. The Unaudited Pro Forma Combined Statements of Income reflect the Enertec Acquisition as if it had been completed on January 1, 2017. The Unaudited Pro Forma Condensed Combined Balance Sheet reflects the acquisition as if it was completed on March 31, 2018.

 

   

 

 

DPW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Combined Financial Statements - Continued
Dollars in thousands except per share amounts

Note 2. Pro Forma Adjustments 

  

(a) This entry reflects the preliminary allocation of the purchase price to identifiable net assets acquired and the excess purchase price to Goodwill as follows:

        

Book value of net assets acquired        
Enertec's equity  $728    (a1) 
Preliminary fair value adjustment of Enertec:          
Preliminary estimate of fair value of identifiable net assets (liabilities) acquired   728      
Goodwill  $4,234    (a) 

 
(a1) The Pro Forma Balance Sheet has been adjusted to eliminate the historical shareholders' equity accounts of Enertec.

 

(a2) The Pro Forma Balance Sheet has been adjusted to reflect a reduction in the proceeds paid to the Seller of $189, the amount owed to Enertec by the Seller, which was paid to Enertec pursuant to the terms of the Share Purchase Agreement.

 

(a3) The Pro Forma Statements of Operations and Comprehensive Loss have not been adjusted for the three year consulting agreement entered into between the Company, Coolisys, Enertec, MICT and David Lucatz, Chairman, President and Chief Executive Officer of MICT (the “Consulting Agreement”) pursuant to which MICT, through Mr. Lucatz, shall provide certain services to Enertec in consideration of (i) an annual fee of $150,000 and (ii) an aggregate of 150,000 restricted shares of the Company’s Class A common. The Consulting Agreement is a continuation of an existing relationship between Enertec and MICT and the historical financial statements of Enertec include these costs.

 

(a4) The Pro Forma Balance Sheet has been adjusted to reflect the net proceeds of $5,633 received from a convertible note financing. On May 15, 2018, the Company entered into a securities purchase agreement to sell (i) a 10% convertible note (the “10% Convertible Note”), (ii) a five-year warrant to purchase 1,111,111 shares of the Company’s common stock at an exercise price of $1.35 per share; (iii) a five-year warrant to purchase 1,724,138 shares of the Company’s Class A common stock at an exercise price of $0.87 per share; and (iv) 344,828 shares of the Company’s common stock to an institutional investor. The 10% Convertible Note is convertible into common stock at $0.75 per share, but may only be converted if an event of default thereunder has occurred and not been cured on a timely basis.

 

The 10% Convertible Note is in the principal amount of $6,000 and bears interest at 10% simple interest on the principal amount with 50% of the total interest due on the principal payable at the closing and the remaining 50% payable over the term of the 10% Convertible Note. After deducting debt issuance costs for fees paid to the Company’s placement agent of $300 and legal fees of $67, the Company received net proceeds of $5,633. As a result of the payment to MICT of $4,773, the Pro Forma Balance Sheet reflects an increase in cash of $860. The Company is required to make principal and interest payments every 2 weeks until the 10% Convertible Note is satisfied in full on November 27, 2018. Due to the short-term nature of the 10% Convertible Note, contractual interest expense of $600 and non-cash interest expense from the amortization of debt discounts of $1,958 will not have a continuing impact on the Company’s financial statements and has therefore not been included in the proforma financial statements. In connection with the financing, the Company agreed to pay the placement agent a cash fee of $300 and a warrant to purchase 150,000 shares of the Company’s common stock with an exercise price of $1.00 per share.

 

   

 

 

The Company computed the fair value of the warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $1,398 based on the estimated fair value of the warrants. The Company estimated that the grant date fair value of the shares of common stock was $193, which was determined from the closing price of the Company’s common stock on the date of issuance. The fair value of the warrants and commons stock of $1,591 is recorded as an increase to additional paid-in capital in the Pro Forma Balance Sheet. In aggregate, the Company recorded debt discount in the amount of $1,958 based on the relative fair values of the warrants, common stock and debt issuance costs of $367, which is recorded on the Pro Forma Balance Sheet in notes payable, net. The fair value of the warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 2.94% was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 127.9% was determined based on the Company’s historical stock prices.

 

 

 

 

GRAPHIC 4 bdologo.jpg GRAPHIC begin 644 bdologo.jpg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

W[&UC^P_P#LWZ;X3B9;C7+QAJ/B"ZCN7GAN]0>-$D:(LJ;8E"*B M#8IVHI;+%F(!^0?_ 24UB'X/_\ !3'P/;^)ENM%NHKR]T22WN;:19H;V6WF MMD@>/;N1O.8(=P&TYW8 )'[V5^6/_!7/_@DGXJ\2?%/4OBQ\*-+EUI=:)O-= MT*QCCBNK.X2/+75LB[3-YI3YAU:W78FR.81RPDG;AMTB&1M^69L@T ?H1_P6;\9Z;X3 M_P""=?CV#4+G[/)KBVVFV*^6S>?<-.D@3Y0=N5CB7L+? M%_4FL[I=-N/[)M8KLQ,()9H_MCR1J^-I=5EB9E!R!(A. PS\W>*8/VFO^"PO MCK2[Z31-2U31(Y91ITL=F=.\-Z0-ZI-MF;Y792?FR\LY52 &V[1^OW[$/[(^ MD?L4?L]:3X'TNX74+BW9[K4]2-LD,FI7